How Often Should You Pay Your Employees?

While paying your employees may seem simple enough, many small business owners are doing it wrong and aren’t paying their employees as often as they should. If you’re making this mistake, then you’re opening your business up to a lawsuit that could be costly. Therefore, it’s important to know the rules regarding the frequency in which you should pay your employees.

According to Indiana law, you must pay your non-exempt or hourly employees their wages at least twice a month. However, you can opt to pay them more often. So approved payroll frequencies include:

• Semi-monthly (twice a month) – 24 times per year
• Bi-weekly (every two weeks) – 26 times per year
• Weekly – 52 times per year

Typically, pay dates for semi-monthly payroll are the 15^th of the month and the last working day of the month. However, if the 15^th falls on a weekend or holiday, you would pay your employees on the last working day before the 15^th.

In addition to the payroll frequency per month, Indiana law also states that employers must pay their hourly employees their wages for each pay period within 10 days of the end of the pay period. For example, if your pay period ends July 18, you must pay your hourly employees by July 28.

Note: If you choose to pay your hourly employees on a semi-monthly basis, an employee can request to be paid bi-weekly.

For any exempt or salaried employees on your payroll, Indiana law states that they don’t have to be paid at least twice a month. So you can choose to pay them monthly. However, most companies opt to pay their exempt employees on a semi-monthly or bi-weekly basis.

Separation from Employment Wage Payments

At some point in any business, you’ll have employees who have been fired, discharged, terminated or laid off, as well as employees who quit or resign. Final wages for these employees must be paid by the next regularly scheduled payday that the employee would have normally been paid if the employee was still working.

The only exception to this rule is if the employee has quit or resigned and you don’t know their address or whereabouts. In these circumstances, you must pay the employee:

• Within 10 days after the employee has demanded payment of their wages.

OR

• When you receive a forwarding address to send their paycheck.

Don’t increase your risk of costly errors due to payroll frequency issues!  Let The Payroll Department in Brownsburg, IN, handle all of your company’s payroll processing needs. We’ll make sure your employees are being paid as frequently as they should, so you can concentrate on running your business – and not running your payroll. Contact us today at 317-852-2568 to learn more.

-Ariane of the Payroll Department Blog Team